By David Lawder and Ismail Shakil
WASHINGTON, March 11 (Reuters) – U.S. President Donald Trump’s administration on Wednesday said it was launching two new trade investigations into excess industrial capacity in 16 major trading partners and into forced labor, to rebuild tariff pressure after the U.S. Supreme Court tore down much of Trump’s tariff program last month.
U.S. Trade Representative Jamieson Greer said that the “Section 301” unfair trade practices investigation could lead to new tariffs imposed against China, the European Union, India, Japan, South Korea and Mexico by this summer.
Other trading partners subject to the excess capacity probe include Taiwan, Vietnam, Thailand, Malaysia, Cambodia, Singapore, Indonesia, Bangladesh, Switzerland and Norway. Canada, the second-largest U.S. trading partner, was not mentioned as a target of the probe.
“So these investigations will focus on economies that we have evidence appear to exhibit structural excess capacity and production in various manufacturing sectors, such as through larger persistent trade surpluses or underutilized or unused capacity,” Greer told reporters on a conference call.
USTR’s official notice for the excess capacity probe cited the automotive sector in China and in Japan, and said a growing number of companies were unprofitable or unable to meet interest payments from operations.
It said that despite China’s electric vehicle capacity outstripping national demand, the country’s top EV maker, BYD , was “aggressively expanding” its overseas manufacturing footprint, with factories in Uzbekistan, Thailand, Brazil, Hungary and Turkey and was expected to expand capacity in Europe, where existing automotive plants are operating at only 55% of capacity.
USTR cited large U.S. trade surpluses in Germany and Ireland as evidence of EU excess capacity. Singapore had excess global capacity in semiconductors despite a trade deficit with the U.S. and Norway had excess capacity by evidence of large fuels and seafood exports, it added.
FORCED LABOR PROBE
Greer also said that on Thursday he would initiate another probe under Section 301 of the Trade Act of 1974 to ban U.S. imports of goods produced with forced labor. That investigation covers more than 60 countries.
The U.S. has already cracked down on solar panel imports and other goods from China’s Xinjiang region under the Uyghur Forced Labor Protection Act signed into law by former President Joe Biden, and the probe could expand such actions to other countries.
Greer said he wanted other countries to enforce bans on goods produced with forced labor similar to those enshrined in a nearly century-old trade law.
The U.S. alleges that Chinese authorities have established labor camps for ethnic Uyghur and other Muslim groups in the western region, though Beijing denies allegations of abuse.
Greer said that he hoped to conclude the Section 301 investigations, including proposed remedies, before new temporary tariffs imposed by Trump in late February expire in July. After the Supreme Court struck down Trump’s global tariffs as illegal under a national emergencies law on February 20, he imposed a 10% tariff for 150 days under Section 122 of the Trade Act of 1974.
He laid out a swift timeline for the excess capacity probe, with public comments accepted through April 15 and a public hearing slated for about May 5.
The probes offer the Trump administration an avenue to rebuild a credible tariff threat against trading partners to keep them negotiating and implement trade deals that were cut to reduce his higher tariff rates under the International Emergency Economic Powers Act.
Greer said the new probes, long telegraphed by administration officials, should come as no surprise to trading partners, and they should stick to their deals, although he stopped short of saying that this would make them immune to all new Section 301 tariffs.
He said that Trump was determined to pursue tariffs and “will find a way to deal with unfair trading practices. He’ll find a way to get our trade deficit down. He’ll find a way to protect U.S. manufacturing. We have a lot of tools to do it,” Greer said.
The probes come as Trump officials led by U.S. Treasury Secretary Scott Bessent prepare this week to meet with Chinese counterparts in Paris to set the stage for Trump to meet Chinese President Xi Jinping in Beijing at the end of March.
Trump’s tariffs on Chinese goods were effectively cut by 10 percentage points by the Supreme Court decision and subsequent temporary tariffs, reducing U.S. leverage on China trade and export controls.
Trump during his first term used a Section 301 probe to back his tariffs on many Chinese imports of about 25% and the law is widely viewed as legally robust, having withstood prior court challenges.
The excess capacity probe targets an area of concern raised with China by successive administrations from Trump’s first term through the Biden administration, growing state-supported manufacturing output that is flooding the world with cheap goods.
Greer said this includes production “untethered” to market demand and that the problem has spread to other countries. He said the probe will focus on evidence including large global current account surpluses, government subsidies, suppressed domestic wages, noncommercial activities of state-owned enterprises, inadequate environmental and labor standards, subsidized lending and currency practices.
(Reporting by David Lawder in Washington and Ismail Shakil in Ottawa; Editing by Matthew Lewis and Stephen Coates)
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